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Taxand's Take - Your regular update on the latest issues affecting multinationals
Welcome to the latest edition of Taxand's Take - your regular update on the topical tax issues affecting multinationals. Accessible online this newsletter is sent to you every two months. And Taxand's Take will give you just that - informed opinion on the latest tax changes and how they affect you.
CANADA - GlaxoSmithKline: Elusive Valuations of Bundled Transactions - Defining a Standard of Reasonableness in Transfer Pricing
The task of making valuations for transfer pricing involving bundled transactions has always been a daunting one. Placing dollar figures on exchanges between related companies for transactions incorporating a combination of goods, services, and intangibles is a considerable challenge for even the most well-versed tax practitioners. Taxand Canada looks at the effects of transfer pricing using a GlaxoSmithKline example, and contemplates the ramifications to the transfer pricing process arising there in an effort to define a standard of reasonableness.
INDIA - Vodafone Ruling on Principles of Taxation of Cross-Border Acquisitions
The Bombay High Court ("HC") has delivered a landmark judgment in the case of Vodafone International Holdings BV on the tax implications related to cross border acquisitions. Vodafone case ruling was a much awaited one as it was a high voltage dispute involving an unprecedented tax position taken by the Revenue and equally unprecedented quantum of tax demand of more than US $2 billion. Taxand India examines the details of this important ruling and subsequent impacts.
LUXEMBOURG / UK - IP and R&D Planning for Small or Medium Sized Enterprises
Small and medium sized enterprises (SME's) can benefit from a research and development (R&D) tax incentives regime in the UK. In the past, it was a requirement that the intellectual property developed was owned by the UK company. Back in December 2009 the then Labour Government announced an intention to remove this intellectual property ownership requirement. As is normal in an election year, the Government did not manage to get all of their proposed changes through Parliament in the first Finance Act (this one is called the Finance Act 2010) which was passed by the Labour Government shortly before the country voted for change. Taxand UK and Taxand Luxembourg review international IP planning and the benefits for UK SME's to claim R&D tax incentives in the UK.
THAILAND - Bridging the Gap Between Transfer Pricing and Customs Valuation
Multinational corporations that import merchandise from related parties continue to face potentially inconsistent treatment by the internal Revenue Department service on transfer pricing and the Customs Department on custom valuation issues. The Revenue Department could decide that the transfer price between related parties was too high, resulting in an underpayment of corporate income tax; for the same set of transactions the Customs Department could determine that the valuation was too low, resulting in an underpayment of import duties. This inconsistent treatment has existed for decades, but it is now becoming increasingly difficult to ignore. Taxand Thailand explains the key differences between transfer pricing and customs valuation and the opportunities to achieve a consistent result. We also attempt to explore the potential for bridging the gap between transfer pricing and customs valuation regimes.
SWEDEN - Supreme Court Judgement on Loan Interest
Recently the Swedish Supreme Administrative Court issued a judgement, where it stated that the credit risk of a lender which is also a 100 % shareholder in the borrower is lower than that of an external lender. This meant, according to the Court, that all things alike, such an internal loan should carry a lower interest than an external loan. The case concerned a loan between Swedish entities, but the Swedish Tax Agency has recently issued a note stating that it should apply also to interest related to a loan with a foreign (100 %) parent company, ie the arm's length interest resulting from a benchmark should be adjusted if the lending company is the 100 % shareholder of the borrower. Taxand Sweden analyses the effect the judgement will have on resident and non-resident companies in Sweden.
NETHERLANDS - Changes in Dutch Real Estate Transfer Tax
As part of the 2011 Dutch Tax Package significant changes to the Dutch real estate transfer tax have been announced. These changes will, as of January 2011, impact taxation of transfers of shares in companies that (directly and in certain cases indirectly) own Dutch real estate assets. Due to these changes, the number of situations in which share transactions in an international real estate investment structure are subject to Dutch real estate transfer tax, will increase. Taxand Netherlands addresses the proposed changes and impact on real estate players operating internationally
The information contained in this document is intended only to be a guide. It must not be relied on in, or applied to, specific situations without previously seeking proper professional advice. Even though all reasonable care has been taken in its preparation, Taxand and all of its firms do not accept any liability for any errors that it may contain or lack of update before going to press, whether caused by negligence or otherwise, or for any losses, however caused, or sustained by any person. Descriptions of, or references or access to, other publications within this publication do not imply endorsement of them. As provided in the US Treasury Department Circular 230, this tax newsletter is not intended, or written by any Taxand firm, to be used, and cannot be used, by a client or any other person or entity for the purpose of avoiding tax penalties that may be imposed on any taxpayer.
Taxand firms have produced this tax newsletter in connection with the marketing of our tax services relating to matters discussed therein. Each taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor. Taxand is a global organisation of tax advisory firms. Each firm in each country is a separate and independent legal entity responsible for delivering client services.
(C) Taxand Economic Interest Grouping 2010